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What is Experiential Retail? And Why Does It Desperately Need Section Data?

by Anh H. Nguyen

A Quick Look at Experiential Retail:

E-commerce could never replace physical retail; they would simply exist side by side. While e-commerce may score points thanks to expediency and convenience, customers will always crave something more, if the pandemic has taught us anything. After all, the time and energy saved by shopping online must be channeled somewhere else. And people have needs that e-commerce may never be able to fulfill: a sense of being served and catered to, the fun of mingling with like-minded shoppers, irreplaceable tactile, visual, and auditory sensations, all of which constitute the experience of shopping.

STORY at Macy's, a concept store that is focused on creative discovery, renewed every few months. This particular theme, color, was geared towards social media-savvy customers. MAC cosmetics offers a color mixing DIY station for people to build their own makeup palettes, for example.

A new kind of retail has risen to target those needs: experiential retail, also called retailtainment, a portmanteau of retail and entertainment. Its purpose has morphed from simple transactions to include an immersive environment, meaningful human interactions, stimulation of the senses, customized and personalized services, and the materialization of brand identity. The name says it all: "experiential" comes before "retail", so in this model, experience might be prioritized even more than sales. The stores have become a kind of theme park, an attraction in itself. And experiential retailers encourage it: many shoppers come to the stores simply for the chance of hanging out with friends, window shoppings, and taking pictures.

Experiential Retail: the Bigger the Merrier

Apple stores around the worlds, mostly located in prime, historic locations with stunning designs and huge space for customers to play with products, are a great example of experiential retail. One of the earliest tech companies that took customer experience to another level.

Experiential retail stores do not always call for big spaces, but more often than not, they are huge. The reason is simply: the larger the space, the better it could showcase all the key products, services, and facilities, provide customers with interesting engagement, and envelop them in a kind of captivating cocoon. The Muji flagship store in Ho Chi Minh city, for example, includes a cafeteria, an interior decoration consultation corner, and embroidery services. The spacious store, with its neutral tones and clean lines, is a personification of the Japanese lifestyle that many people wish to emulate: practical, elegant, and stylish in an understated way. The Super Center of Concung, the biggest mom-and-baby brand in Vietnam, occupies a 6-story building with more than 10000 products, a nutrition consultation area, a cafeteria for parents, and a playground for kids. This project aims at becoming an all-in-one destination for the family to shop, dine, and have fun.

The opening of Concung's Super Center garnered widespread attention

The proliferation of this superstore model shows a shift in the retail landscape: customers seek more than just popping in a store and swiping their cards. Now they may want either excitement, relaxation, or enrichment. They want to spend more time shopping, not less. And big experiential retail stores want to keep customers longer, too. It is a win-win situation.

Not all retailers could become experiential. In order to deploy this model successfully, there are a few prerequisites. The brand has to have a sufficiently large selection of products. The brand has to have a coherent mission or character. And the brand has to know its customers quite well. The last requirement is an absolute must-have, for two reasons: first, because experiential stores are usually large, complex, and difficult to monitor. Secondly, because experiential retail is still quite new and needs some getting used to, from both the customers and the staff. Measuring and analyzing customer engagements will help smooth the learning curve and makes running experiential stores much easier.

Lululemon, with its wellness and yoga classes offered right inside the stores, is one of the retailers that are redefining the in-store experience.

How Supersports Superstore Used Palexy's Section Data to Give Customers a Good Time

One of the experiential store use case that we have done was with Supersports, the No.1 sporting goods retailer and distributor in Thailand and Vietnam. With a lineup of more than 20 globally well-known and prestigious brands such as Crocs, New Balance, Fila, Adidas, and Nike, Supersports provides a wide selection of footwear, apparel, and accessories of the highest quality to sports enthusiasts at over 1200 locations. Of all those stores, the Supersports store at Robins Crescent Mall, Vietnam, with an over 2000 square meter surface area, is one of the largest. It is as big as 20 mono-brand stores combined. As expected, monitoring such a big store comes with unique challenges, just like managing multiple small stores simultaneously.

In order to track and analyze any development within its segments, there needs to be a tool capable of providing comprehensive, up-to-date, and accurate section data. However the Supersports team at Robins Crescent Mall lacked such a tool. Not only were the store managers unable to identify the root cause for section performances, they also had no supporting evidence when they needed to train, advise, and communicate to the staff. That is where Palexy's Store Optimizer Solution came in.

There are 16 sections within the Supersports flagship store, and the Lifestyle section is considered a strategic one. It is supposed to attract a large number of shoppers, kindle interest in passersby, and represent Supersports as a trendy brand. It has to upend the notion that sportswear is usually boring and unfashionable. It has to impart a sense of confidence in customers. It has to promise and deliver enjoyable experience. The Lifestyle section used to be relegated to the back of the store, which of course made all the above impossible.

The revamping of the Lifestyle section went hand in hand with Palexy's analysis. Palexy provided Supersports store managers with Section Data metrics such as Section Visit Rate, Net Sales, and ATV on a daily, weekly and monthly basis. Supersports store managers used those metrics to assess whether the new strategies in Product/Section Display and Staff Reallocation were efficient at improving each section's performance, including that of the Lifestyle section. What we did was find out and confirm what works:

-When all 4 sub-categories under the Lifestyle Section were moved to the frontal and more accessible part of the store, the section visit rate to 4 sub-sections in the Lifestyle Section rose by 15% on average. Rearranging strategic products/sections to the most accessible areas has successfully attracted more customers. It shows the importance of having key/eye-catching products where customers could quickly detect them.

-After the Lifestyle Section merchandise got a complete makeover, with the products on display being mixed and matched to represent stylish looks, and staff with relevant fashion knowledge and a certain sporty chic vibe were assigned to the Lifestyle Section to provide assistance to customers, both the Net Sales of Men and Women Lifestyles Footwear roughly doubled compared to the control period, and landed at the 2nd and 3rd places for Sales Growth. Notably, the Average Transaction Value (ATV) of 4 sub-sections in the Lifestyle Section also rose by 21% on average. This shows how a repositioning of product category may inspire renewed enthusiasm in shoppers and help them enjoy the shopping process even more.

- Other changes made to the layout, the merchandise, and the staffing of Supersports also resulted in: 10 among 16 sections saw an increase in their section visit rate. 14 among 16 sections saw an increase of 59% on average in their sales.

The success of this use case proves that bigger and complex stores like most experiential stores needs Section Data. In this case, having Section Data in place has contributed tremendously to the easy sailing of the Supersports Crescent store. The Supersports team now have solid confirmation regarding which improvements in Section Display and Staff Reallocation benefit the Section Visit Rate, the Net Sales and the ATV, of the Lifestyle Section individually, and of the overall store as well. Also, the store managers now have a firm foundation of data to draw from when giving their staff feedback.


The key takeaways?

Experiential retail is a great alternative to traditional retail because it focuses on creating good experience for customers. Customers could feel the difference, and they usually respond actively and positively.

Since customer experience lies at the center of experiential retail, it it essential to understand what customers wants. So experiential retailers need data.

Experiential stores are usually big and hard to keep track of. So experiential retailers needs section data.

So if you are a retailer exploring the experiential approach, find a technology vendor that excels in section data first.



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